What is an ENDOWMENT?

An endowment is a large sum of money given to the university, mostly by alumni. This money is then invested so that the profit can be reinvested into the university. The University of Florida currently has an endowment of about $1.2 BILLION, one of the largest public school endowments in the country.

When the University of Florida receives a donation, they give the money to the UF Foundation, a non-profit corporation that manages UF’s funds. The UF Foundation then takes all the money that is to be invested and gives it to UFICO, the University of Florida Investment Corporation. UFICO is another non-profit corporation, which is responsible for handling all of UF’s investments.

Where is the endowment invested?

The truth is, we don’t know. Not only that, but we’re not allowed to know! UFICO keeps its portfolio a secret. We’ve heard various explanations for why it has to remain a secret, but none of them are very convincing. The most commonly cited reason is that UFICO will lose its competitive edge if its investments are known to the public.

What we have been told is that UF is invested in a number of hedge funds and mutual funds. If the names of those funds are known, then they will be in very high demand, and UF will be less likely to have their money managed by them in the future. 

What about the SUNSHINE LAWS?

The sunshine laws are several laws that mandate that public institutions in the state of Florida aren’t allowed to keep secrets about how public funds are used. Originally, we believed that this would apply to UF’s investments. However, because UF funnels its money through two private corporations (UF Foundation and UFICO), it does not have to disclose where those private corporations are investing UF’s money.

So what are you suggesting?

Gainesville Area STUDENTS FOR A DEMOCRATIC SOCIETY has proposed a Socially Responsible Investment Policy. This policy calls for the creation of a committee of STUDENTS, FACULTY, and ALUMNI to oversee the investments of UFICO. This means that instead of allowing everyone to see their investments (and thus risking their profitability), only a small group of people would have access to this information. This group would represent the diverse interests of the University of Florida, as opposed to just the Board of Trustees and UFICO. 

How would the committee operate?

The committee would review the corporations in which UF is invested. They would hear the concerns of the different groups that they represent, and then make recommendations about possible courses of action to the Board of Trustees. The Board could then approve or ignore these recommendations. If they were approved, the Board could then mandate that UFICO follow them.

What actions would the committee recommend?

The committee could recommend a few different actions to help reform corporate policy.

First, UF could engage in SHAREHOLDER ADVOCACY. If a person (or university!) holds shares of a corporation, then they are technically a partial owner of that corporation. As such, they have a limited amount of input into how the corporation is run. Sometimes, if a corporation is engaged in some practice that shareholders find questionable, many shareholders will band together to force the company to change their ways. For example, gas companies could be encouraged to invest more money into research for alternative fuels.

Secondly, UF could DIVEST from corporations that are particularly objectionable. For example, Halliburton is a war profiteering corporation that is overcharging the US government for crucial military support supplies. Dick Cheney used to be the CEO of this company, and many believe that Halliburton has received many no-bid contracts from the government because there is some bias from the administration towards giving Halliburton lucrative deals. A corporation like this is unlikely to be swayed by shareholder advocacy, especially given the type of people likely to invest in a corporation like this. In this case, UF could choose to remove its money from this corporation.

Third, the committee could seek out corporations that are ahead of the curve, so to speak, in terms of respecting the environment and workers’ rights. They could then recommend that UF invest in these companies to actively promote moral business practices.

To find out more about SRI, you can check out the good folks at the Responsible Endowments Coalition.

To read about what we've done so far to make this happen, click here.